Study: US biofuels policies flawed

Some people warned about this ahead of time.

http://www.rice.edu/nationalmedia/news2010-01-06-biofuels.shtml

The United States needs to fundamentally rethink its policy of promoting ethanol to diversify its energy sources and increase energy security, according to a new policy paper by Rice University’s Baker Institute for Public Policy.

The paper, "Fundamentals of a Sustainable U.S. Biofuels Policy," questions the economic, environmental and logistical basis for the billions of dollars in federal subsidies and protectionist tariffs that go to domestic ethanol producers every year. "We need to set realistic targets for ethanol in the United States instead of just throwing taxpayer money out the window," said Amy Myers Jaffe, one of the report's authors.

Jaffe is a fellow in energy studies at the Baker Institute and associate director of the Rice Energy Program.

As an example of the unintended economic consequences of U.S. biofuels policy, the report notes that in 2008 "the U.S. government spent $4 billion in biofuels subsidies to replace roughly 2 percent of the U.S. gasoline supply. The average cost to the taxpayer of those 'substituted' barrels of gasoline was roughly $82 a barrel, or $1.95 per gallon on top of the retail gasoline price (i.e., what consumers pay at the pump)." The report questions whether mandated volumes for biofuels can be met and whether biofuels are improving the environment or energy security.

The report, which includes analysis by environmental scientists, highlights the environmental threats posed by current biofuels policy. "Increases in corn-based ethanol production in the Midwest could cause an increase in detrimental regional environmental impacts," the study states, "including exacerbating damage to ecosystems and fisheries along the Mississippi River and in the Gulf of Mexico and creating water shortages in some areas experiencing significant increases in fuel crop irrigation." Moreover, the report challenges claims that ethanol use lowers greenhouse gas (GHG) emissions and argues, "There is no scientific consensus on the climate-friendly nature of U.S.-produced corn-based ethanol, and it should not be credited with reducing GHGs when compared to the burning of traditional gasoline."

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